In the face of rising public concern about global warming, biofuels appear to offer a magic solution. Keep growing, keep driving, keep flying - but do so in a more sustainable way that allows you to keep your conscience clean.

It sounds attractive, but there are some concerns to be thought through before we all jump on the ethanol-fuelled bandwagon. The rush for greener fuel has already pushed some commodity prices up, with a direct impact on the affordability of food in developing countries. In Mexico earlier this year, there were riots in the street because people couldn't afford their tortillas. The maize used to make them was in demand to help power SUVs across the border, and therefore cost more than usual.

A sharp increase in production of biofuels could also cause more rural poverty as small farmers are dispossessed - as is happening in Indonesia as a result of palm oil production. It could lead to deforestation, loss of biodiversity, and human rights abuses. These are all potential results of over-intensive agriculture, which development organisations and environmental campaigners have been warning about for years. Moreover, because biofuels may come at the expense of natural carbon sinks such as rainforest or peatland, they may actually increase overall carbon emissions.

It would be ironic indeed if an apparently magic bullet actually started making things worse.

And yet, if we get it right, biofuels could play a role, albeit a limited one, in reducing overall carbon emissions. And the development of national biofuel programmes in developing countries could offer an opportunity to stimulate agricultural development for poor and small-scale farmers, improve fuel security, improve the balance of payments and create decent jobs. For example, in Brazil, the government is taking measures to ensure that small farmers are able to benefit from increased market opportunities created by demand for bio-diesel. However, there are still a number of social and economic challenges to be overcome.

Oxfam, along with others, is grappling with the particular dilemmas posed by this hot issue. We are consulting with allies, partners and experts to find a sustainable way forward that helps people and the environment, and does not just sop western consciences and facilitate corporate expansion.

It seems clear to us that policies and guidelines for biofuel production must be put in place at both the international and national levels to ensure that poor people and the environment are the winners, not the losers. Food security, biodiversity, land and labour rights, and the preservation and promotion of small farmers' livelihoods, are all pro-poor principles that must be upheld in national and international regulation of the biofuels industry. This regulation is urgently needed as biofuel production balloons.

There is no doubt that all possible methods of reducing carbon emissions and preventing further climate change must be seriously considered. The threat is too great not to do so. In our work, Oxfam is already seeing the impacts of climate change on poor communities, which are the least responsible but the most vulnerable. They need help to adapt, and they need the richest countries, historically the largest polluters, to act now to reduce their emissions and keep global warming as far below 2 degrees centigrade as possible.

However, we must not assume that all action to combat climate change will necessarily benefit the poorest. The choices we make as we respond to the threat of climate change could take us in one direction or another. In a positive scenario, adaptation and mitigation efforts will also reduce inequality and poverty and promote development. Decisions we make will be informed by past successes and failures and the global solution will engender more sustainable and equitable growth.

In the negative scenario, our responses to climate change will repeat the mistakes of the past. We will implement purely market-based solutions that fail to take into account relative levels of growth or specific needs. We will demand that poor countries pay first, before the historical polluters act. We will not look at the different needs of women v men, rural v urban, developed v developing, but will apply a "one size fits all" solution that ultimately benefits the haves at the expense of the have-nots.

So we are facing an enormous threat, but we are also being offered a once-in-a-lifetime opportunity. If we make the right choices in the response to climate change - choices based on the principles of equity and fairness - then we could make a positive and lasting difference to the lives of millions.